Tax Administration

For nearly 30 years, the Taxpayer Compliance Measurement Program has been the Internal Revenue Service's (IRS) primary method of gathering information on taxpayer compliance. IRS collects such data by auditing a random sample of taxpayer returns in which every line on a chosen return is examined. But IRS, concerned that this process costs too much, is overly intrusive on compliant taxpayers, and yields untimely data, has been planning to redesign the program. This report discusses data generated by the program, evaluates the merits of IRS' concerns with the program, and identifies way to improve the program while it continues to meet valid user needs. GAO also looks at how the redesign of the program could affect IRS' strategic objectives for the 1990s--increasing voluntary compliance, reducing taxpayer burden, and boosting productivity.

GAO found that: (1) IRS uses TCMP data to make statistically reliable estimates of compliance nationwide and develop formulas for selecting tax returns for audits; (2) TCMP is important to non-IRS users for policy formulation, research, and revenue estimation; (3) IRS plans to redesign TCMP to make it less costly and less intrusive on compliant taxpayers, and increase productivity; (4) implementation of proposed TCMP changes will hamper IRS ability to detect changes in and improve voluntary compliance, reduce taxpayer burden, and increase productivity; and (5) redesigning TCMP will not meet non-IRS user needs or provide a consistent measure of compliance.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Team: Phone: